Well here's your problem right here. I've lived in counties with less people than that.
Michigan legislative action thread
Posted on 12/10/2013 8:45:38 AM PST by whitedog57
Kevyn Orr, Detroit’s emergency manager, is threatening to take over one of Detroit’s pension funds after a report found that retirees received extra payments while the funds lost value.
Mr. Orr proposed for Detroit to pay 20 cents on the dollar for the $3.5 billion that the city says it owes its two pension funds, one for 20,500 nonuniformed retirees and one for 12,700 retired police and firefighters.
Detroit, of course, is the largest municipal bankruptcy in U.S. history, although New York City and Cleveland came close.
This comes after another Detroit-area fiscal meltdown, the infamous General Motors bailout. Treasury divulged that it lost $10.5 billion on the GM bailout. Why did the Federal government bail out GM anyway? Bondholders at GM were owed $30 billion at the time of the bailout. A legitimate bankruptcy would have sold or liquidated the company’s assets and split the proceeds between the two major claimants, the bondholders and the unions. GM had roughly $20 billion in tangible assets, plus probably another $10 billion in intellectual property. These sums could have either been liquidated or put into a new company, with the equity split between bondholders and unions. Old bondholers in GM received about 30 cents on the dollar.
I applaud Kevyn Orr for considering a takeover of Detroit’s pension fund. Extra payments to retirees while the funds are losing money is tantamount to a firm liquidating its assets against the wishes of the bondholders.
As the Feds get involved in bankruptcies for political reasons (like GM), the rule of law is violated and investors are harmed. Still, the GM bondholders will make out better than Detroit pension recipients (30 cents versus 20 cents on the dollar).
Detroit pension recipients are likely angry this Christmas season. Then again, bad things happen when pension funds are liquidated against the will of the bondholders.
Jack Frost roasting on an open fire, blisters forming on his nose.
jackfrost
Anyone know if that loss includes the Tax Loss carry-forward that GM was allowed to keep ( allows the Reconstituted GM to avoid Federal Income taxes for several years) in contravention of normal bakruptcy regulations?
The winners and losers picked themselves.
When they crossed from having more retired public employees than they had active, current public employees contributing to the retirement plans, and the prior employees were grifting off the plan, this outcome was set in stone.
I don’t think my township has any paid employees. We contract everything out to the county.
In Saginaw they went for 500 city employees to 20 by contracting out to the county and private entities.
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